Speeches and Presentations



LCQ14: Hong Kong's competitiveness

Following is a question by the Hon Abraham Shek and a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, at the Legislative Council meeting today (November 13):

Question:

According to the Global Competitiveness Report 2013-2014 of the World Economic Forum (the Report), Hong Kong's position in the overall rankings of the Global Competitiveness Index among 148 countries/economies has advanced by two places to the seventh this year. Despite the advancement in overall ranking, Hong Kong ranked significantly low in several areas (e.g. Hong Kong's enrollments for primary and secondary education remained at low rankings of 89th and 93rd respectively). The report recommended that Hong Kong needed to improve on higher education (ranked 22nd) and innovation (ranked 23rd). It also advised that Hong Kong should address the quality of research institutions (ranked 31st) and the limited availability of scientists and engineers (ranked 32nd). In this connection, will the Government inform this Council:

(a) whether it will step up its effort to increase primary and secondary enrollment rates of Hong Kong;

(b) how it will enhance Hong Kong's competitiveness in terms of the quality of research institutions and availability of scientists and engineers; whether it will allocate funds to upgrade the quality of local research institutions and amend the immigration policy to attract more overseas scientists and engineers to work and live in Hong Kong; and

(c) as the Report has stated that the five most problematic factors for doing business in Hong Kong are (i) insufficient capacity to innovate, (ii) inefficient government bureaucracy, (iii) inflation, (iv) policy instability and (v) inadequately educated workforce, whether the Government has introduced or will introduce targeted measures to address these problems; if so, of the details; if not, the reasons for that?

Reply:

President,

My reply to the three parts of the question is as follows:

(a) According to the explanatory notes of Global Competitiveness Report 2013-14 of the World Economic Forum (the Report), the net primary enrollment ratio refers to the ratio of children of official school age who are enrolled in school to the population of the corresponding official school age. As regards the official school age, it is defined by the national education system sourced from the UNESCO Institute for Statistics. For the case of Hong Kong, that means children aged 6 to 11. The gross secondary enrollment ratio is the ratio of total enrollment, regardless of age, to the population of the age group that officially corresponds to the secondary education level. For the case of Hong Kong, that means teenagers aged 12 to 18 and 12 to 17 before and upon the full implementation of the New Academic Structure respectively.

The situation of Hong Kong does not tie in with the aforesaid definition. We allow children aged 5 years and 8 months to less than 6 years to be admitted to Primary 1 and, likewise, students aged 11 years and 8 months may already be attending secondary school. These students have not been covered by the net primary enrollment ratio by definition. In fact, 9 years of free and universal basic education from Primary 1 to Secondary 3 have been made available to all children attending public sector schools since 1978 and enrollment to primary education in Hong Kong is ensured.

Besides, with the full implementation of the New Academic Structure in 2011-12, Hong Kong students already have 6 years of secondary education from Secondary 1 to Secondary 6. Nonetheless, in 2010-11 to which the Report refers, Hong Kong only had 5 years of secondary education when comparing with other countries/economies having 6-year secondary education. We trust that the situation of Hong Kong, especially the gross secondary enrollment ratio, would be more accurately reflected in future reports.

(b) The Government attaches great importance to promoting the competitiveness of our research institutions including the higher education sector and our research and development (R&D) centres, as well as nurturing local science, technology and engineering talents.

Strengthening R&D capability requires long-term investment. Hong Kong has made considerable progress in this aspect with the efforts made by various sectors over the years.

Quality of research institutions
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In the higher education sector, we have six local universities actively engaging in scientific R&D activities. In the 2011-12 academic year, these six universities utilised around $5.7 billion of Government funding for research purposes. Three of them were ranked within top 50 in the Quacquarelli Symonds World University Rankings 2013-14.

On the applied R&D front, the Government set up R&D Centres in 2006 to drive and coordinate R&D work in five selected technology areas. In the past seven years, the Centres have undertaken over 570 R&D projects, with a total funding support of over $3.3 billion from the Innovation and Technology Fund (ITF). The five R&D Centres have demonstrated satisfactory performance in meeting industry contribution targets, undertaking more R&D projects and realisation/commercialisation of R&D results. Examples include the Nu-Torque cotton yarn production technology jointly developed by the Hong Kong Research Institute of Textiles and Apparel (HKRITA) and the Hong Kong Polytechnic University; the E-Lock enabling technology developed by the Hong Kong R&D Centre for Logistics and Supply Chain Management Enabling Technologies (LSCM) jointly with the Customs and Excise Department for simplifying the clearance process for air-land and sea-land transshipments; and a tracking system jointly developed by the HKRITA, the LSCM and the Applied Science and Technology Research Institute for preventing Alzheimer's patients from leaving their elderly centres without knowledge of the centres' management.

Availability of scientists and engineers
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In the 2012-13 academic year, around 34 000 students were enrolled in University Grants Committee (UGC)-funded programmes in science, engineering and technology disciplines, representing about 35% of total enrollment and new blood to serve industry needs.

The Government has also implemented a series of measures to encourage university graduates to pursue a career in the science and technology field. Such measures include:

(i) Innovation and Technology Scholarship Award Scheme by the Innovation and Technology Commission (ITC)

The Innovation and Technology Scholarship Award Scheme provides financial support for local outstanding science and technology university students to participate in overseas attachment, internship and mentorship programmes on science, technology and engineering.

(ii) Hong Kong PhD Fellowship Scheme by the Research Grants Council (RGC)

The Scheme was launched in 2009 to attract the best and brightest students from around the world to pursue doctoral studies in Hong Kong. A total of 4 785 applications from 106 countries/regions were received for the 2013-14 academic year, and 185 elite candidates from 33 countries/regions have accepted offers for the fellowship.

(iii) Internship programme by the ITC

The internship programme under the ITF provides funding support for science, technology and engineering graduates to work on R&D projects funded by the ITF. Over 1 300 internship positions were provided since the inception of the Programme.

(iv) Early Career Scheme by the RGC

The Scheme was introduced to attract, support and nurture new junior faculty members. The Scheme supports qualified researchers to undertake independent research work and develop educational activities.

(v) Incubation programme at the Hong Kong Science Park (HKSP)

The incubation programme at the HKSP provides a spawning ground for young technopreneurs by offering affordable accommodation, shared-use facilities and equipment as well as business related assistance to support their innovation activities. Over 430 companies have already benefited from the Programme.

(vi) Instilling a vibrant culture on innovation

The ITC continues to organise and support various activities to promote public interest in science and technology, in particular for the younger generation. These include the annual InnoTech Month (with the InnoCarnival as its highlight).

Immigration policy
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We administer an open and liberal immigration regime to facilitate the entry of talents and professionals from around the world. Currently, talents and professionals (including scientists and engineers) may enter Hong Kong through the General Employment Policy, Admission Scheme for Mainland Talents and Professionals, Quality Migrant Admission Scheme and Immigration Arrangements for Non-local Graduates. We regularly review these admission schemes to ensure that they continue to suit the circumstances and needs of Hong Kong.

(c) The Report cited 16 problematic factors for doing business in Hong Kong, which were selected based on ratings given by respondents. The top five issues identified were capacity to innovate, government efficiency, inflation, policy stability and education of workforce. The Government recognises the need to ensure Hong Kong continues to be a business-friendly place.

Capacity to innovate
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Our capacity to innovate is supported by our core strengths such as excellent connectivity with the Mainland and the rest of the world, world-class universities, robust intellectual property protection, etc. However, we also face various challenges and limitations. For instance, Hong Kong is a service-driven economy, with the manufacturing sector contributing only 1.6% to the gross domestic product (GDP) in 2011. Furthermore, Hong Kong does not have national defence expenditure, which in many other economies are important drivers of R&D activities.

To strengthen our capacity to innovate, the Government strives to enhance its collaboration with the industry, academia and research sectors to promote R&D as well as technology transfer. The key strategies are the provision of infrastructural and financial support, the development of human resources, collaboration with economies outside Hong Kong and fostering a culture on innovation in the community. For example, with the occupancy rate of HKSP exceeding 95%, the Government has commenced the development of Phase 3 of HKSP which is expected to be completed between 2014 and 2016, and will accommodate some 150 additional technology companies and create 4 000 R&D jobs. In addition, the ITF has been enhanced to support realisation/commercialisation of local R&D results including prototype production and the conduct of user trials by the public sector. In 2011, we also launched a Public Sector Trial Scheme, which provides additional funding support to completed R&D projects funded by the ITF for the production of prototypes/samples and the conduct of trial schemes in the public sector. To capitalise on the opportunities in the Mainland market, we are in close liaison with the Mainland authorities with a view to establishing more collaborative platforms, e.g. Partner State Key Laboratories in Hong Kong, the National High-tech (Partner) Industrialisation Base for Green Technology in HKSP, the Hong Kong branch of Chinese National Engineering Research Centre in the Applied Science and Technology Research Institute, etc.

Government Efficiency
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Hong Kong is recognised by the World Bank's global ranking in 2013 as the second best place for ease of doing business. Its ranking has moved up three places comparing to seven years ago (2006). Since 2006, the Government has implemented various business facilitation measures on the advice of the Business Facilitation Advisory Committee and its task forces. It will continue to do so under the "Be the Smart Regulator" Programme as well as other initiatives.

Inflation
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Consumer price inflation was generally on an easing trend during 2012. It has been broadly stable in 2013, with underlying inflation averaged at 4.0% in the first nine months, similar to that in the second half of 2012.

Being a small and open economy, Hong Kong has limited control over inflation. Yet, we have adopted a multi-pronged approach to reduce inflation risks and mitigate the impact of inflation on people's livelihood. The Government has been striving to ease domestically generated price pressure by forestalling property market exuberance, preventing excessive credit growth, pursuing a prudent fiscal policy, while providing one-off, well-targeted relief measures to help the lower-income groups. Moreover, the Government has been investing heavily in infrastructure, thus increasing the capacity and efficiency of our overall economy, as well as alleviating inflationary pressures arising from the supply side over the medium to longer term.

Policy Stability
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Hong Kong is a place with policy stability. The Heritage Foundation has ranked Hong Kong the world's freest economy in its annual index of Economic Freedom since 1995. Hong Kong has long been known as a free and open society where the rule of law prevails. Private property rights and contractual obligations are highly respected and legally protected. We have a clean and efficient government that practises a free market policy. There are essentially no restrictions on the flow of tourists, goods, services or information. The same applies to foreign exchange and the movement of funds. Hong Kong is also equipped with a sound regulatory system. Freedom of speech and expression has always been respected, and citizens' fundamental rights are fully protected by the Basic Law. These institutional strengths are Hong Kong's crucial competitive edge.

Education of Workforce
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The Government's policy is to provide quality, diversified and flexible study pathways with multiple entry and exit points through the parallel development of the publicly-funded and the self-financing post-secondary sectors. For the 2012-2015 triennium, we have substantially increased the number of UGC-funded undergraduate places, namely, the number of first-year-first-degree places has been increased to 15 000 per annum and the number of senior year intake places has been doubled to 4 000 per annum. Meanwhile, the number of full-time locally-accredited self-financing undergraduate places available this year is about 7 000, while the number of self-financing senior year undergraduate places has been increased to 7 600 this year, from about 3 000 in the 2010-11 academic year.

Our degree-level participation rate is now over 30%. It is estimated that in the coming two years, over one-third of our young people in the relevant age cohort will have access to degree programmes. Taking sub-degree places together, we expect that almost 70% of our young people will have access to post-secondary education. These graduates will contribute to the pool of talent underpinning the future development of Hong Kong. Looking ahead, we anticipate that with a decreasing population in the relevant age cohort, the ratio of young people receiving post-secondary education will continue to rise.

We note in the Report that the gross tertiary education enrollment rate is included as an indicator. As a result, economies with a four-year normative undergraduate curriculum are measured more favourably than those with a three-year one. The normative length of our undergraduate curriculum has been extended from three to four years starting from the 2012-13 academic year.

Wednesday, November 13, 2013